Listed Property Trusts

[nelehdine]

AMP NZ Office trust revaluation gain of ........ $253M !!!!! ... portfolio 12.5% under-rented, portfolio virtually 100% let ... cap rates now below 7% and still buyers falling over themselves to add to portfolio ... little new supply on the horizon. DO NOT SELL !!!!

Disc: happy holder of 131,809 APT's

[COLIN]

Yes, this justifies the premium that APT has attracted for a while.

[nelehdine]

Gain is bigger than I was expecting Colin ... add back in the accounting liability of the depreciation taken on the portfolio and the portfolio is now worth a cool $1.48/ share. Considering the under-renting present in the current rental income of 12.5% you could do a crude extrapolation and say the portfolio is "under-valued" by 12.5% so the "REAL" net asset backing might be closer to $1.65. APT is certainly NOT expensive at $1.39 and it could be argued the shares are extremely good value at present. My average cost on my 131,000 shares is $1.09 so valuing the portfolio at $1.65 I am up over 50% and I've only held the shares for about 8 months. I view this stock as a core portfolio holding and the NAV is more important to me than the current shareprice as I intend to hold these for the next 10-15 years. They sit very nicely besides my residential investments and also other property based investments I have in dairy farms and vineyards.

I LOVE this stock !!

[COLIN]

Enid/Helen: I also am a happy holder of APT, and of a number of the other LPT's. However, I am starting to have a few niggling doubts about the ever-lowering of "cap" rates on major investment properties - they are getting too close to where they were in '87, and we know what happened after that. What do you think?

[nelehdine]

Good question Colin, I wasn't really a follower of commercial property 20yrs ago ... more into punting on stocks like Omnicorp and Rainbow !!. APT's average cap rate across the whole portfolio is now 6.90% ... only 5 years ago you could have bgt the creme-de-la-creme of NZ commercial office blocks at around a 10% yield so yes it is a big move. As APT point out though this is a global phenomina and its not just in office blocks ... look at the yield on residential property compared to a few years ago. At 6.90% I'm still very comfortable holding , rents are rising fast and unlike 1987 the Auckland skyline isn't currently littered with cranes putting up 40 story office blocks with few tennants available to fill the space. Wellington will always be a tight market , just the topography of the place along with the ever increasing demand from Govt agencies makes you think rents are likely to keep rising for a while yet. Compared to overseas office space NZ still looks like great value. The major clouds on the horizon I think are if Bollard really gets stuck in and we see iinterest rates into double figures ... I can't see that happening so have discounted that risk. I can see APT trading into the mid 150's by the end of the year for a 10% return in 9 months ... add in 5 or 6c in dividends and your looking at an annualised return in the high teens. Pretty good for a low risk investment ... and every time you fly into Wellington you can admire your premium quality office portfolio !! ... I will be tomorrow !!

[Tim]

What does the news of the share placement have on APT, is this a time to buy or not?

[nelehdine]

Fundamentals still look excellent ... equity is certainly cheaper than debt at the present time so this is no doubt a good deal for shareholders. Stock won't set the world on fire over winter if Bollard hikes another couple of times but I have no qualms about quality of APT's portfolio over the long term so am happy to hold.

[Lawso]

Hi neleh.
You may be interested to hear that I've just bought into APT. A bit late in the day, perhaps, and not on your scale - only 15,000, which is considerably less than my other LPT holdings - PFI & MGP. But I share your confidence in this sector over the long haul.

[COLIN]

Happy to continue holding my APT but have dumped my MGP and switched into FKP on the ASX. MGP is a solid outfit with a lot of potential but price seemed to be getting out of kilter with NTA, even allowing for near-term revaluations, and dividend yield is relatively low compared with its peers. And what better time to be switching more of one's portfolio offshore, with the Kiwi at a record high. Bought FKP yesterday, on the dip following a large and successful placement. I like their field of operations, with ever-increasing numbers in the retirement stage and living ever-longer.

[lakeside]

quote:Originally posted by Tim

What does the news of the share placement have on APT, is this a time to buy or not?

Seems to have knocked 7 cents off APT. Dilution I guess. The APTGBs would be even better if it wasn't for all the cheaper placements.

I have been watching & buying SLPF on the unlisted market (links off recommended sites for direct broking.)

I like them as they are selling for $1.14 with a net asset backing from Sept 06 of $1.39.

They are due an annual report and were $1.20 a year ago so really should be worth $1.40.

They are property and finance but should have gone well to March 2007. They are not shares until Dec 2008 but look valuable and depending on structure could get some of the gains of PIEs, tax changes etc etc. They seem to have offices, retail, industrial property - often through 20% or so in other trusts eg rural properties trust, NPT.

Why are they so cheap? Well liquidity I guess being on the unlisted market. Possibly the Bridgecorp / Dorchester dealings have scared people but seems like St L have been just doing good margin deals.Also the company structure is hard to follow.

The notes sold for $1.08 at one stage in the last couple of weeks, and someone picked up 600 000 rights on the last day they traded for 2c (so paid $1.07 for that stake). Unlisted gives the proportions of shares sold by different broking firms and it seems to me Maquaries have a bigger proportion eg 40% of all unlisted trades on big SLPF days so maybe there is an Aussie interest?

Anyway I like them - they feel safer than other shares & options - like APT but with good capital gain even if liquidity is limited sometimes. And mean while they pay out 8% interest - 2 % quarterly due at the end of May.